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Question
Which of these is also called broad money?
Which of these is also called broad money?
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Solution
The correct option is A M3.
Money supply refers to the total stock of money of all types (
currency as well as demand deposits) held by the people of a country at a given
point of time.
Money supply is measured in several ways which includes M1, M2, M3
and M4 measurement of money supply. Every measurement has it own
definition with different components varying from most liquid to most rigid form.
M3 measurement of money supply is a broader concept of money supply compared to M1. Besides all the components of M1, it includes net time deposits (or fixed deposits or term deposits) of the people with the commercial banks. Therefore, M3 is also called broad money.
Money supply refers to the total stock of money of all types ( currency as well as demand deposits) held by the people of a country at a given point of time.
Money supply is measured in several ways which includes M1, M2, M3 and M4 measurement of money supply. Every measurement has it own definition with different components varying from most liquid to most rigid form.
M3 measurement of money supply is a broader concept of money supply compared to M1. Besides all the components of M1, it includes net time deposits (or fixed deposits or term deposits) of the people with the commercial banks. Therefore, M3 is also called broad money.
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